November 2011

The Amazon tablet Kindle Fire is available in the USA. The first incarnation seems to have some hardware and software shortcomings which limits its usefulness to online shopping:

"They now have an inexpensive tablet that makes it extremely easy for its users to buy more from Amazon.

Note the apparent absence of goals such as “Make a great reading experience” or “Make a great portable video player”. It serves Amazon’s business goals (assuming it sells), but it doesn’t serve its customers’ goals well."

eBay Buys Hunch

eBay has taken over the startup launched by Flickr founder Katherine Fake. Hunch, a recommendation site, was to be had for about $80 million. Hunch learns user preferences via questions and after several answers, can predict what you like. Forbes:

"Hunch launched in 2009 as a platform that recommended things it believed its members would like based on what they shared online. The service draws on machine learning, data mining and predictive modeling to make its suggestions. EBay plans to incorporate this “patented prediction technology” into the search function on its site, as well as its advertising and marketing."

Etsy Gift Ideas

Etsy is just in time for Christmas with another gift finder. The gift ideas tool searches Facebook friends’ interests and makes suggestions for related products on Etsy.

This is a rather simple but very effective implementation of personalisation via Facebook, which we wrote about on our German blog last year.

Etsy had also offered a similar tool last year in December. We mention it again here because it shows just how easy it is to personalise via Facebook.

Augmented Reality

Also now in Prague: A supermarket there is using (at least temporarily) augmented reality for quick purchasing in subway stations via posters with QR codes and the buyer’s mobile phone.

In July, we already reported on how Tesco was using the same principle to increase recognition of its eFood shop in South Korea.

Private Sales Clubs

Reuters reported on how private sales clubs such as Gilt are having increasing difficulty to buy inventory:

"[..]retailers and manufacturers cut production by 10 percent to 15 percent. By early 2010, there was a lot less inventory, Dennis said.

As companies grow, they can usually reduce costs by buying more in bulk. But as flash sales sites expand, they must get products from a shrinking supply, which raises costs. Their price discounts have fallen this year, partly because companies are competing for inventory and paying higher prices, said Greencrest's Palit.

Gilt discounts used to be 70 percent, but 40 percent to 50 percent is more common now, Palit added."

Swag Of The Month

Swag Of The Month wants to bring fashion related subscription services to men. For this they have already raised $100,000 from investors:

"Swag Of The Month is a new $9 subscription service that lets men receive t-shirts and other clothing items that match their preferences from independent fashion designers."

"The service launched last month on pocket change and now has 300 paying customers. Retailers give Swag Of The Month their clothes for free as an alternative form of marketing."

Originally posted in German by Marcel Weiss, adapted for excitingcommerce.com by Jason Soo.

Three takeovers within a short time frame (Tradoria, Play.com and Kobo), puts the Japanese online concern Rakuten in the same league as Naspers – both are amongst the most actively expanding e-commerce players at the international level.

At the end of July, Rakuten planted its first stake in the German market with the acquisition of Tradoria. By now the Rakuten world looks as follows (PDF):

Rakuten is primarily represented in the USA via Buy.com and in Europe (France) via Priceminister.

With the takeover of the Canadian eBook provider Kobo at the beginning of November for $315 million (USD), Rakuten is stepping into a completely new business area (press release, PDF).

Shopping parties and direct sales models are the next big thing in e-commerce, and nowadays we aren’t the only ones with the same opinion. The statement applies particularly to female shoppers who are still not well addressed by traditional e-commerce models.

"Last August, Chantel Waterbury walked into First Round's New York City office and told me all about jewelry, empowering women entrepreneurs in the fashion space, and what it means to design inspiring accessories.

She expounded on the completely missed opportunity to combine offline and online direct selling into a singular complementary vision.

What's exciting about chloe + isabel is that they're working on a modern version of a proven direct model "for today's social web"--but they have both the jewelry and direct selling DNA to build it off of a solid base.”

One of the pioneers in the jewelry segment is Stella + Dot, which was founded in 2004 and grew the 2006 revenues from $900,000 to $32 million in 2009. Their goal for this year is to take their 2010 figure of $104 million to $200 million. At the beginning of the year, the initial investors gave up 10% of their equity to Sequoia for $37 million.

In the context of our Exceed Program, we are supporting ambitious startups in their early phases. Currently we are setting up a capital round for amonsgst others, a new party-shopping concept. Serious investors with concrete interest in this segment are welcome to contact us.

The most exciting point is that Square is a company who is rethinking payment systems from a software point of view. The first tentative step in this direction is the new loyalty concept for customer retention. Merchants can automatically recognize regular customers and set up special offers for them. As described on the Digits blog from the WSJ:

"Square is launching Square 2.2 for iPad, iPhone or Android phones, allowing merchants using the technology to now offer rewards to customers that make repeat purchases. The merchant can determine what constitutes a “regular” customer – whether it’s ten purchases or more, for example – and issue a deal or reward at the point of purchase."

Following this train of thought, there are further connections possible both offline and online which Square could implement in the future:

Connections to Twitter, Facebook or Klout: Multipliers get special offers.

Identification of groups at the point of sale for group sales campaigns.

Connections to live-shopping style offerings.

Fundamentally, Square can act as an interface between the web and the non-internet based retailer. Even a connection between Groupon Now! and Square could be easily imagined.

The social shopping startup The Fancy received a $10 million investment from the French fashion conglomeratePPR (Gucci, Puma, and lately also Brioni). This is not the first contact for PPR in the online segment, having previously been active with MyFab. At first glance, the luxury brand company is an atypical investor and this sentiment has been reflected in the tech scene:

"Interestingly, the big bucks don’t come from a typical venture investor, but from a new lead investor PPR, the $16 billion French multi-national run by Francois Henri-Pinault, which owns the globe’s biggest fashion brands, including Gucci, Bottega Veneta, Yves Saint Laurent and Balenciaga. PPR has earned a reputation for its smart, aggressive acquisition strategy and saw its stock jump after an impressive third quarter, but is little known in the tech world."

"Why the big interest from the world of high fashion? The Fancy is part of a new breed of startups that encourage users to clip and share their favorite images from the web.

Tumblr is the originator of this behavior, and generated a lot of interest among big fashion brands. Pinterest, which just raised a large round of its own, was the evolution of this business to a much more product-focused service.

Like both these sites, the Fancy is about visual discovery and has become a natural home for fashion brands, which see a high level of engagement from tastemakers around their goods. Clicking around the site a bit, we discovered that Mr. Pinault, husband of Salma Hayek, is quite the active user himself."

The bookmarklet from The Fancy automatically collects the biggest pictures and their descriptions from surfed shopping sites, which is then incorporated into the URL of that particular item page of The Fancy. This could be viewed as a kind of SEO strategy, which if successful, would not be to the appreciation of some online merchants.

One of the income streams for The Fancy could be affiliates. Also the intelligent linking between mobile snapshots and retailers who offer the products could be pursued. And there are naturally several more possibilities to imagine: if successful, The Fancy (or other similar startup) would be able to create an efficient aggregation layer above the individual shop level.

The Fancy implements what has already been described here at Exciting Commerce under the moniker of the “Social Web Pattern”:

The follower principle within the user group.

A stream which is relevant for the application area. In this case via the bookmarklet installed by the users, the collected product photos are attractively compiled and presented. According to availability, larger photos will be exchanged by smaller photos. Smaller photos are presented besides each other, creating an impression of a catalog. Users can choose if “Featured Items” or other special categories will be displayed in the stream.

A big “Fancy it” button appears when rolling over a product photo. With that, the one-click gesture is implemented without having the interface too cluttered. There is also of course a site with popular items.

The result is a very visual social shopping site that brings together all the necessary components while still looking good.

Could The Fancy be a candidate for the much sought after “Twitter for Shoppers”? The attempt, which models itself after the successful blog platform Tumblr is definitely one to watch.

GroceryRun, by wide margin the currently most exciting online supermarket concept, is much sooner than expected running on a daily sales pattern:

"Guess what? As of Monday November 14 2011, GR is going DAILY! Wednesday will still be The Big Day with a torrent of new and awesome deals, but we’ll be adding new stuff on other days too, with Theme Days and heaps of fun all thrown in to the mix."

GroceryRun is a spinoff from Australia’s CatchoftheDay and offers live-shopping style supermarket bargains for quick decision makers. GroceryRun shifted to weekly campaigns not so many weeks ago.

What is there to learn from the Groupon IPO? First, you only need to release “just enough” of the overall stock so that sky-high valuations can be driven from a mini basis of 5% share. And also that IPOs and poker share the same bluffing and trickery, and the two differ only by the scale of public fervour that follow them.

Fortunately, company valuations ("How to justify Groupon’s valuation") are not the bread and butter of Exciting Commerce, but rather new business models. And in this respect the Groupon experience teaches online businesses two lessons:

On one side: the dynamic. As soon as someone comes up with an exciting new business model, it propagates with breath-taking speed. This is an aspect which Exciting Commerce has always pointed out: Many e-commerce firms take comfort in a false sense of security. The Amazons and eBays of the next generation are guaranteed not to need another 10-15 years to develop into a serious competitive threat. Three to five years are all it takes for the face of the e-commerce world to change. The e-commerce firms of today need to mentally and strategically prepare themselves for competition which might grow explosively.

To the observers in Germany: This scaling phenomenon isn’t just limited to the USA anymore. German e-commerce rockets are being ignited, launched and controlled out of offices in Berlin. Those who understand this online business can nowadays scale very quickly. Experiential data and control components are available. It should also be plainly seen that there are worldwide just a few experts who have truly mastered this art, and these professionals are utilizing their head-start mercilessly.

Therefore the best advice a person could give is: learn your online business and be serious about it! There are still too many events, talks, and behind the scenes racketeering which is all just hot air and distracts away from the essentials. And even if there is still a lot unknown about the online business, there is nevertheless progress to be seen from studiously applying the online know-how which is already available. This is good news for all innovative thinkers (think big and act quickly) and bad news for those stuck in old world. The only thing that helps: start from the beginning and catch up as quickly as you can on everything that you missed out on.

Live-Shopping for the Advanced

The satisfying aspect of the Groupon success for Exciting Commerce is that this latest stock market hero happens to be a live-shopping business.

Exciting Commerce has been profiling the potential of live-shopping models since the first Live Shopping Days conference in 2008. Back then there was no Groupon. And as we reported on the Groupon model for the first time at the Live Shopping Days at the beginning of 2009, they were still largely unnoticed by the majority of observers. Hype and investor interest were non-existant.

Those who had discounted “live shopping events” as a fad of the day back then have been taught a lesson in the last 5 years: First by the flash sale private shopping clubs and now by Groupon and its competitors.

Some ironically claim that Groupon remained true to form during the IPO and in comparison to their originally targeted valuation of $30 billion, had knowingly gone to market at a very Groupon-worthy 50% discount. That is what live-shopping is: Getting the public all fired up, raising the demand, and then with a solid discount still come out on top. Congratulations to the masterminds behind the deal!

Business Insider lists out some of the several areas where Groupon gets kudos. Congratulations also to the German investors (Samwers, Holtzbrinck, eVenture Capital) who after fumbling on the StudiVZ deal have this time done everything right and are now billionaires (at least on paper). Still exciting to follow will be whether or not the sky-high valuation can be kept up in the long run. The stock market poker has just begun for Groupon.

Home.Woot! is the first new spinoff site since Kids.Woot! went online in the Summer of 2009. Darold Rydl already described at our 2010 Live Shopping Days conference which criteria Woot! uses to select new categories.

Besides their One-Day-One-Deal sites (Woot!, Wine.Woot!, Shirt.Woot!, Sellout.Woot!, Kids.Woot!, Home.Woot!), Woot! has also started up a Deals.Woot! and a Local.Woot!

And the first concessions have been made to the new powers that be. Woot! members are now the happy receivers of a daily newsletter, which Woot! didn’t seem to need in the years gone by.

For those who find traditional entrepreneurship too old-fashioned and the VC financed startup scene too dubious: Günter Faltin describes in his German language book “Kopf schlägt Kapital” (brains beats capital) how you can nevertheless stay ahead of the game as a founder of an enterprise. He uses the term “Entrepreneur as Composer”: Entrepreneurs who keep their fixed costs low and build their businesses out of available components in order to protect their capital:

In his opening talk, "The Art of Entrepreneurship" at the Entrepreneurship Summit in Berlin, Günter Faltin addressed questions such as: is making money and the maximization of profit everything – or can (or should) entrepreneurs strive for something further? How do we define business-oriented thinking in a world which is in the midst of unprecedented change?

Many entrepreneurs and business leaders occupy themselves all too often on business models at the lowest level, that is – models focussing on basic human needs which draw success from the allure of consumption. He who does not consume becomes useless for the business. But where are the entrepreneurs who are developing meaningful business models which see people as more than just consumption machines and offer them more than just pure gratification of consumption?

"Update an Industry!" was one of the appeals at the Summit last week in Berlin. Many industries are holding on dearly to out-dated conventions. He who can recollect the original purpose of an industry would be able to find a way to revolutionize it. Faltin himself runs a socially responsible tea business.

Exciting Commerce has been trying to show both in print and at conferences that there are more sensible and cost efficient ways to connect an industry as opposed to what some traditionalists advocate.

This entrepreneurship model is always easier said than done. Some of the sessions at the Entrepreneurship Summit helped to make this point very clear. The challenge is of course to find the right components and partners and then with intensive contemplation to figure out the ideal combination.

Günter Faltin is not a fan of rushed business startups. A few good entrepreneurs are better than a thousand would-be founders who are actually on the way into bankruptcy. His plea is thus to experiment generously, start-up as a sideline and to let ideas ripen over time before going all-in to the concept.

Just to emphasize: This entrepreneurship model is one approach for a modern business. Another model is the “Professional Service Firm” as espoused by Tom Peters. Equally good ideas for entrepreneurial thinking come from Michael E. Gerber, as written in his book “The E-Myth Enterprise”. New on the US bestseller list is “The Lean Startup” from Eric Reis.

Originally posted in German by Jochen Krisch, adapted for excitingcommerce.com by Jason Soo.